March 2019

The global economies of baseball cards and tariffs…

I remember trading baseball cards with friends as a child, and everyone was trying to get the latest Frank Thomas, Randy Johnson or Ken Griffey, Jr. card produced by Topps. I am not sure if today’s generation of kids collect cards anymore, but I remember trying to use whatever information I had to get the best deal possible. Usually, I would try to use my trade partner’s favorite player to my advantage in the trade, but we all ultimately wanted to walk away with a good deal—and some great new baseball cards.
The U.S. has a similar philosophy when making trade agreements with other countries. Each trading partner tries to get the best deal they can. However, since trade agreements create opportunities for both domestic and global economic growth, a compromise is typically needed for each side to be happy and agree to a plan.

The Office of the U.S. Trade Representative (USTR) is responsible for administering all U.S. trade agreements by monitoring the implementation of the agreement, the trading partners’ implementation, enforcing the U.S.’ rights under those agreements and negotiating trade agreements that advance our trade policies and economies. The World Trade Organization (WTO) governs the rules for international trade—particularly those dealing with the regulations of trade in goods, services and intellectual property between participating countries—and resolves trade-related disputes with independent judges through its dispute resolution process.

Free trade agreements are meant to reduce trade barriers, minimize import quotas and tariffs and increase the trade of goods and services between trading partners. However, in 2018 we saw the Trump Administration impose tariffs of 25% on steel and 10% on aluminum under Section 232 of the Trade Expansion Act of 1962; these were imposed on nearly all countries, with a few exceptions. Section 232 authorizes the President to adjust the import of goods through tariffs, or other means, from other countries if the goods are deemed a threat to national security. The Trump Administration also imposed tariffs against China under Section 301 of the Trade Act of 1974, one of the principal statutory means by which the U.S. enforces its trading rights and addresses unfair practices by trading partners. The tariffs by the Trump Administration were met with retaliatory tariffs by many of our closest allies and largest trading partners1.

Last fall, several countries brought disputes to the WTO; however, the process can take years before the disputes are resolved. Rather than waiting on the WTO, trading partners can negotiate new trade agreements directly with our country to resolve differences quickly.

For instance, the U.S. began renegotiating the North American Free Trade Agreement (NAFTA) shortly after President Trump took office in 2017. On Sept. 30, 2018, the U.S., Mexico and Canada announced they had reached a new agreement that would replace NAFTA. This agreement was the U.S.-Mexico-Canada Agreement (USMCA). On Nov. 30, 2018, President Trump, President Enrique Peña Nieto (Mexico) and Prime Minister Justin Trudeau (Canada) signed USMCA, with the intentions of moving forward. However, all three countries still need to apply their domestic procedures before ratification and implementation can occur. Until then, NAFTA remains in full effect.

USTR has also released U.S. negotiating objectives for proposed trade agreements with other partners over the last few months. USTR is required to publish a detailed summary of specific negotiating objectives at least 30 days before to initiating negotiations with a trade partner. The aim of each of these negotiations is to address tariff and non-tariff barriers, so that trade between the U.S. and various trading partners is both fair and balanced.

The Household & Commercial Products Association (HCPA) has been proactively working on behalf of our members due to their significant concerns over the disruption to the supply chain caused by the imposition of tariffs by the Trump administration on U.S. trading partners. The Section 232 tariffs on aluminum and steel impact the cost of the packaging material for a wide range of products, including the container and valve for aerosol products and the Section 301 tariffs impact a variety of chemicals used throughout the industry.

We will continue to build upon these efforts on the tariffs in 2019, our previous efforts including sending letters to President Trump, the Commerce Secretary and the USTR; working with allied trade associations through various coalitions; and voicing our concerns to trade, consumer and inside-the-beltway publications. With the numerous actions that HCPA is focused on across multiple fronts, we will continue to ensure that we represent our members and keep them updated and engaged on the latest activities regarding USTR’s negotiations with some of the U.S.’ closest allies and largest trading partners.

Life was much simpler when I was trading baseball cards with friends. I was simply worried about the cost of a pack of cards and not about global economics. However, if global economics are keeping you up at night, feel free to contact me at [email protected]SPRAY

For U.S. Trade Actions/Tariffs and Other Countries Retaliatory Measures: link